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Amy DavisJuly15,2015
Agenda
WhoisNovozymes?
WhatistheRenewableFuelStandard?
Whydowehaveit?
Wherearewenow?
Casestudy:USandBrazil
WhereareUSinvestmentsinbiofuelsnow?
Introducing nature's problem solvers
Everywhere you need us
Novozymes in numbers
Novozymes in 2014
Novozymes’ world map
Our biological answers, near you
What is the Renewable Fuel Standard?
• Passedin2005aspartoftheEnergyPolicyAct,expandedin2007aspartofEnergyIndependenceandSecurityAct
• Requiresobligatedpartiestoblendupto36Bgallonsofrenewablefuelby2022
• Setslifecyclegreenhousegasemissionreductionrequirementsforqualifyingrenewablefuels–firstandonlyfederalclimatemitigationpolicyintheUS
• EPAconductsannualrulemakingsettingobligationsandcanwaivestandardduetoeconomicharmorlackofsupplyofrenewablefuel
Why do we have it?
Reduce dependence on foreign sources
of crude oil.
Reduced price of domestic
transportation fuels.
Reduced GHG
emissions.
Increased U.S. farm income,
subsidy reduction.
Where are we now?
• TheUnitedStatesconsumed18.6millionbarrelsperday(MMbd)ofpetroleumproductsduring2012,makingustheworld'slargestpetroleumconsumer
• TheUnitedStatesimported11.0MMbdofcrudeoilandrefinedpetroleumproductsin2012
• TheUnitedStatesreliedonnetimports(importsminusexports)forabout40%ofthepetroleum(crudeoilandpetroleumproducts)thatweconsumedin2012
• U.S.dependenceonimportedoilhasdeclinedsincepeakingin2005
Theeconomicdownturnafterthefinancialcrisisof2008
Improvementsinefficiency
Changesinconsumerbehavior
Patternsofeconomicgrowth
Gainsindomesticproductionofcrudeoilandnaturalgas
Increaseduseofdomesticbiofuels(ethanolandbiodiesel)
o Over200plantsinoperationin29states
o Morethan15Bgallonsofcapacity,512millionbarrelsofcrudeoil—morethantheamountofoilimportedannuallyfromSaudiArabia,theRFScallsfor20Bmoregallons
Case study
1973US
No immediate policy reaction to 1973
U.S. approach to energy policy has been sporadic and piecemeal reacting to calm and crisis
1970s - Price controls, reduced speed limit, rationing
1980s - substantial deregulation of the energy sector
Great rush of global investment in alternative fuels in US
Petroleum (crude and products) import dependence peaked at 60% in 2005, but was just 28% in 2014.
Petroleum import dependence would have been 35% without 14.3 bg of ethanol in 2014.
Fighting over fictional 10% “blend wall”
BrazilImmediate priority = Domestic biofuel and oil production, steady 30+ year policy put in place and maintained
Majority flex fuel cars
• Seriesofenergycrisesbetween1967and1979
• Mostsignificantstartedin1973• BoycottAmericaandpunishthewest
inresponsetosupportforIsraelintheYomKippurwaragainstEgypt
• Followingthiscrisis,theUSandBrazilbothworkedatdecreasingtheirenergydependenceonforeignoil
• Thedivergentpolicydecisionshaveproducedvastlydifferentresults
• OrganizationofArabPetroleumExportingCountries(OAPEC)oilproducersimposedanembargo
• Priceofcrudequadrupled,notb/cofsupply/demand,political
• PresidentRichardNixon:“[l]etthisbeournationalgoal:Attheendofthisdecade,intheyear1980,theUnitedStateswillnotbedependentonanyothercountryfortheenergyweneedtoprovideourjobs,toheatourhomes,andtokeepourtransportationmoving.”
Where are US investments in biofuels now?
• AglobalrecessionandnearconstantinstabilitysurroundingtheRFShasgreatlyimpactedinvestmentinadvancedandcellulosicbiofuels.
• ThethreatofCongressionalaction(hearings,repealandreformamendmentsandstandalonebills)arehardtoexplaininboardroomsandinvestormeetings.
• Proposedmismanagementoftheannualvolumeobligationsettingsincelate2013hasturnedthefutureprospectsofanadvancedbiofuelmarketplaceintheUStoacapped,shrinkingandsaturatedmarketbytakingintoaccountwhetherornottheoilindustryhasmadeinvestmentstosupplyrenewablefuelstotheUSconsumer.
• NoinvestmenthasmaterializedforanadvancedbiofuelfacilityintheUSsincetheEPAfirstleakedit’snewproposedmethodologyfortheRFS.
• EPAhasbeenunabletofinalizeanyrulewiththisnewmethodologysincefirstattemptingin2013.
• EPAhasnowproposedajointrulemakingfor2014,2015,and2016usingthesameflawedmethodologythathassentinvestmentoutsidetheUSforadvancedbiofuels.WearecurrentlyinthecommentperiodforthatproposalandhavebeentoldtoexpectafinalrulebyNovember30,2015.
• ThebiofuelindustrywillworkwithEPAonthisproposal,wedonotsupportanylegislativeactiononthepolicy.Weneedstabilitymorethananythingelseatthisstageofcommercialdevelopment.
